KUALA LUMPUR, The increasing cost of living against the still low household income is forcing some Malaysians to borrow to make ends meet, says an economic expert.

A lecturer at Universiti Tun Abdul Razak, Prof Barjoyai Bardai said these people also obtained loans to possess the necessities of life, like car and housing.

Yet, there were also those who were forced to take loans because they spent more than their income, he added.

Barjoyai said although the loans would increase the people’s purchasing power and help to spur the country’s economic growth, it had a negative effect on the people in the long term.

“With accumulated debts, there will come a time when they cannot repay their loans. This is because in their commitment to service their loans, they do not realise that they have spent the income due to them for the next 15 to 20 years,” he said when contacted by Bernama.

Bank Negara Malaysia Governor Muhammad Ibrahim was recently quoted as saying that currently the nation’s household debt stood at 89.9 per cent of the gross domestic product, which was among the highest in Asia.

According to Barjoyai, to be able to live comfortably with the current economic situation, the minimum household income in the country should be between RM6,000 to RM7,000 a month.

He said with the income of 80 per cent of the people in the country still below the amount, it was impossible for them to not borrow and have savings.

“We hope the government remains committed in efforts to increase the income of the people in tandem with the objective of making the country a high-income nation,” he added.

He also suggested that financial institutions in the country should create an investment scheme for the people, instead of offering them financing.

“We have that in Islamic financing. Change the concept of loan to investment.

“For example, for vehicle ownership, the banks do not offer financing, but provide the vehicle and lease it to their customers at minimal profit. In principle, the customer does not own the vehicle. Until a certain period, the vehicle can be sold to the customer at a reasonable price,” he added.

He said a similar concept could be applied for house ownership and for purchase of other household items, like air-conditioners and refrigerators to avoid the people from taking personal loans at high interest rates.

Meanwhile, a public relations officer at a hotel, Azlan Naif, 27, said he took up a part-time job as his salary at the hotel was not enough to meet the rising cost of living.

“It is not just the increase in prices of goods, there are also the study and housing loans to pay,” he added.

A private sector employee, Puteri Nur Anisa, 26, said there was the tendency of people with serious debts going to unlicensed money lenders or loan sharks for help and that often landed them in more problems.

She also said young people, especially fresh graduates, often spent their income to pay off loans, and so they were often not able to save.

– BERNAMA

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